When you’re starting a business, you want to see results quickly. You want to know that you’re doing the right thing and you want to see tangible chartable proof. However, research has shown that this fixation with fast growth may hinder more than it helps in the long term.
Research conducted by Yale University has shown that, over the last century, the average lifespan of a business has decreased by more than 50 years. The research, which was conducted on the Standard and Poor 500 Index, showed that each business typically endured for an average of only 15 years. This is a very small average lifespan for such big businesses, which begs the question of whether quick growth also leads to a quick downfall.
Various experts have testified that our obsession with speedy gains eventuates in disappointment, including Carl Honore, author of In Praise of Slowness. He expounds on the detrimental effects of focusing on speed rather than quality. Martin Reeves, the Director of the BCG Henderson Institute asserts that the success of businesses should be measured by their ability to endure. A focus on longevity is the key to developing a sustainable business plan, Reeves says.
The process of business growth is unpredictable and unstable and rushing into the situation with only short-term plans is the reason for long-term failure.
“We need to think more modestly and subtly about when and how we can shape, rather than control, unpredictable and complex situations,” Reeves opines. Instead of following the direct path, considering a more winding alternative may be the key to success.
Lasting businesses, such as Coca-Cola and Cadbury, tend to grow steadily, which ensures their strength and durability. These businesses are more than a hundred years old and have survived massive social and economic change, and tense political climates. Businesses that rise quickly haven’t had time to assess the different avenues of growth or opportunities that can be found in these times. Businesses that focus on quick growth and gains eventually stagnate, as the growth is unsustainable. Conversely, slow growth allows plenty of breathing room to learn and for assessment of future goals.
To prove his point Reeves conducted research with Simon Levin, a professor at Princeton University, to find that enduring companies like Cadbury had the same key characteristics that facilitated their success. These characteristics of survival are: redundancy, diversity, modularity and adaption. Each of these traits requires more focus than quick growth allows, yet the perseverance clearly has it’s rewards.